Despite the underperformance of fixed income we discuss in this Spotlight guide why the value proposition of the asset class hasn't gone away. In particular we review how the RLAM management team use existing, proven funds to actively manage consistent monthly income streams and adapt the portfolio to changing interest rate and credit market factors.

Within this guide, you will find some surprising survey results from FE, a selection of adviser opinions and some Architas views too. We hope this guide will provide you with some food for thought on this burning issue.

IFA inflow into mutual market increases to Â£90bn

Some £90bn will be put into mutual funds via intermediaries over the next four years, according to M...

Some £90bn will be put into mutual funds via intermediaries over the next four years, according to Merrill Lynch Investment Managers.

Gary Withers, managing director at the group, said the IFA channel was contributing an increasingly large share of inflows to asset managers.

Withers said in 1992 the UK asset management industry had £63bn under management. That has increased to more than £200bn today which represents annualised growth of 22% in the intervening years.

According to research group Cerulli & Co this growth rate will increase to 65% annualised over the next four years which will result in assets under management of £555bn.

Withers, speaking at Merrills' London roadshow for intermediaries, said that retail assets were currently around 40% of pooled vehicle assets in the UK, but that position was set to change.

If this projection is accurate, Withers said IFAs will find themselves investing around £90bn of client assets over the next four years.

In order to support this, Withers said Merrills would continue to offer a 2% discount on most of its Isa funds, as well as continuing the 3% discount on transfer business until the end of the tax year.

He said: "In previous years the largest pools of assets were institutional and it is in this market that Mercury Asset Managers built its position as the leading investment manager in Europe.

"That is now changing. Institutional assets are still large but are largely mature. All the growth is coming from the retail business and it has become very much the focus of our business and approximately 90% of our business come through IFAs."

Withers said Merrills was investing £100m in information technology in the coming year, which would provide further support for the IFA market by giving them more frequent investment reports and fund updates.

Advertising spend, which includes a £1m spend over the next six weeks, has been increased to build up its brand presence.

A full review of Merrills' fund range, first reported in Investment Week in September, remains underway.